Tether is a stablecoin linked to the US dollar. It means 1 USDT is intended to be worth 1 USD, and it usually is, but there have been price fluctuation in the past. It is the biggest stablecoin and also the most traded cryptocurrency. It was created in 2014 by Brock Pierce, Reeve Collins, and Craig Sellars. The project was initially called Realcoin, but shortly after its inception, the name was changed to Tether. Tether Limited, the business behind it, is in charge of issuing it and keeping the reserves. It is a cryptocurrency token that is issued on many major blockchains. Tether's objective is for 1 USDT to be interchangeable for 1 USD. Tether Limited does this by keeping reserves in cash, equities and bonds to back the tokens it produces.

About stablecoins

Stablecoins are excellent for those who want to own a digital currency with a stable value that is backed by an asset. Tether is the most popular stablecoin for this, but it is also the most contentious.

There are several stablecoins available, many of which are tethered to the US dollar. Although it technically provides the same service as its competitors, Tether's popularity (and that of one of its key competitors, USD Coin) distinguishes it. Tether has the highest market capitalization of any stablecoin. More critically, its daily trade volume is substantially bigger. Tether, in fact, has the biggest 24-hour trading volume of any cryptocurrency, therefore it plays a significant role in the digital token ecosystem. Stablecoins have an advantage over other forms of cryptocurrency in that they have a known price range under typical conditions. Because they are not volatile, they are used differently from cryptocurrencies purchased as an investment. The following are the most popular applications for stablecoins like Tether:

-        Sending money to another party anywhere in the globe via digital means.

-        Transferring money between cryptocurrency exchanges.

-        Earn high interest rates by lending out your stablecoins (some lending platforms pay more than 10 percent).

-        Storing money on an exchange so that they may be rapidly exchanged for other cryptocurrencies.

Disadvantages

The most serious disadvantage or risk with Tether has been its questionable business practices. Tether Limited has previously misrepresented its reserves. It was hesitant to release specific details on those reserves for several years.

Tether rules

Tether Limited must have 1,000 USD in reserves in order to coin 1,000 USDT, guaranteeing that customers may get their money back if they want it. Although that is how Tether is meant to function in principle, the reality is a little more difficult; there have been concerns about Tether Limited's dependability with relation to its reserves. Initially, the firm stated that each USDT was backed one-to-one by 1 USD. That turned out to be incorrect. Tether Limited's lawyer stated in 2019 that 74% of USDT tokens were backed by cash or cash equivalents. However, when Tether Limited disclosed its reserves in 2021, just 2.9 percent of USDT tokens were backed by cash. The remainder of its reserves were made up of secured loans and corporate bonds and commercial paper. Tether stood impressingly well in stablecoins market storm in 2022 having been able to dispel doubts.